EUR/USD Remains At Risk of More Losses

Key Highlights

  • The Euro recovered recently, but it failed to move above 1.1500 against the US Dollar.
  • There was a break below a key bullish trend line with support at 1.1425 on the 4-hours chart of EUR/USD.
  • The US Producer Price Index increased 0.6% in Oct 2018 (MoM), more than the +0.2% forecast.
  • Today, the France ILO Unemployment Rate for Q3 2018 will be released, which is forecasted to decline to 9.0%.

EURUSD Technical Analysis

The Euro recovered from the 1.1300 swing low against the US Dollar. However, the EUR/USD pair failed to break the 1.1500 resistance area and later started a fresh decline.

EURUSD Technical Analysis Euro US Dollar

Looking at the 4-hours chart, the pair traded as high as 1.1499 and later started a sharp decline. The pair moved below the 1.1440 support zone and the 100 simple moving average (red, 4-hours).

It opened the doors for more losses and the pair declined below the 50% Fib retracement level of the last wave from the 1.1300 low to 1.1499 high. Moreover, there was a break below a key bullish trend line with support at 1.1425 on the same chart.

The pair even broke the 61.8% Fib retracement level of the last wave from the 1.1300 low to 1.1499 high, which is a bearish sign. Overall, it seems like the pair may continue to move down towards the 1.1310 or 1.1300 support levels.

If there is an upside correction, the broken supports near 1.1400 and 1.1420 are likely to act as strong hurdles for buyers in the near term.

Fundamentally, the US Producer Price Index for Oct 2018 was released by the Bureau of Labor statistics, Department of Labor. The market was looking for an increase of 0.2% in Oct 2018, compared with the previous month.

However, the result was better than the forecast as there was a rise of 0.6%. Looking at the yearly change, the US PPI increased 2.9%, more than the 2.5% forecast. The report added that:

The index for final demand less foods, energy, and trade services rose 0.2 percent in October after climbing 0.4 percent in September. For the 12 months ended in October, prices for final demand less foods, energy, and trade services advanced 2.8 percent.

Overall, the US Dollar buyers remain in control, which could result in more losses in EUR/USD in the near term.

Economic Releases to Watch Today

  • Italian Industrial Output for Sep 2018 (MoM) – Forecast +0.6%, versus +1.7% previous.
  • France ILO Unemployment Rate for Q3 2018 – Forecast 9.0%, versus 9.1% previous.


Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

Aayush's latest posts